Scottish small and mid-sized enterprises (SMEs) and mid-sized corporates are experiencing the highest rate of late payment of anywhere in the UK, according to research carried out by Bacs Payment Schemes.

Bacs survey of 350 UK companies found the rate of late payment to firms in Scotland was 67 per cent, just ahead of Northern Ireland at 66 per cent and ahead of England and Wales at 62 per cent and 59 per cent respectively.

Bacs estimates the late payment debt burden currently being shouldered by SMEs across the UK has reached £39.4 billion, with larger corporates owed £6.7 billion at any one time, taking the total to £46.1billion.

The researchers base this on the figures compiled by market research consultancy BDRC continental, which puts the number of SMEs operating in the UK in 2013 at 1,721,000 and a further 9,000 corporates with 250 or more employees.

The BDRC continental database excludes all micro businesses which tends to be either sole traders or director only businesses, and if included, the total, as estimates by the Department for Business Innovation & Skills, puts total number of SMEs in the UK at 4,895,655.

Bacs has calculated its figures based on the total number of businesses experiencing late payments from its survey and then calculated the estimated average owed to SMEs and corporates from the survey and then multiplying these figures by the estimated number of businesses experiencing late payments.

The result is Bacs estimates the value of late payments has reached £46.1 billion.

Bacs said from its survey, sixty per cent of UK SMEs are now experiencing late payment issues and the average overdue amount is £38,186.

One in four SMEs said if the amount owed grew to £50,000 it would be enough to send them into bankruptcy.

In contrast, Bacs said its survey found the average corporate is owed almost £1 million pounds on average.

Bacs survey also suggests SMEs and corporates are paying a further £9.16 billion a year in additional costs, and around a third of the firms surveyed said they are spending around £500 a month as a consequence of money owed to them, though some figures quotes were as high as £10,000 a month.

The costs associated with bad debts include overdraft fees and admin costs in chasing debts, with one in four companies surveyed saying the spend more than 10 hours a week chasing late payments.

This is having a knock-on effect on how businesses deal with their own suppliers, with the survey finding a quarter of firms are being forced to pay their own suppliers late and one in five – 21 per cent – saying they were having to rely on bank overdrafts to cover late payments.

More than three-quarters of the firms surveyed – 76 per cent – said settlement was being delayed a minimum of a month beyond agreed payment terms.

Mike Hutchinson of Bacs, said: “Despite the positive signs emerging about the financial state of the nation as a whole and the fact that we are thankfully moving out of recession, SMEs, which everyone agrees are the drivers of a successful economy, are being held back because of the increasing pressures of late payments.”

The Federation of Small Businesses' National Policy Chairman, Mike Cherry, said: "These latest figures are a further reminder of the major headache caused by late payments.

“Not paying on time and lengthy terms can have a seriously detrimental impact on small firms.

“The FSB wants the Government to tackle the issue head-on in its Small Business Bill.

“Small firms simply can’t be expected to lend interest free to larger companies, which late payments and extended payment terms force them to do.

“In addition, the Prompt Payment Code needs to have more power and authority to help the smaller firms. For example, ensuring the largest businesses spell out their payment terms.

“The EU Late Payment Directive is very clear that if payment terms exceed 60 days, they must explain why. It’s time for big companies to take their responsibility to pay on time seriously.”